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Sponsored search placements for local advertisers will see spending move over from display ads.

The Borrell Associates report on local online advertising spending sees a lot of dollars being spent over the next five years. While that spending increases, the destination for those dollars will start to shift to paid search.

With projected local online ad spending totaling $8.6 billion, the study claims nearly half of that will be on sponsored search result placements. The reasoning seems pretty straightforward: online advertising is measurable and price competitive, with search being an effective tool.

MediaPost found out from Borrell president Gordon Borrell that it will be the decline of display ads that leads to the boost in paid search:

"Local banner ads and local listings will start declining to the point that paid search will roughly match it over the next five years. That's going to catch a lot of newspaper and TV Web site operators off guard," he said.

In fact, Internet companies such as Google and Yahoo! already account for 32 percent of the local online ad market, while directories are responsible for 20 percent, according to Borrell Associates.
The article also noted the study's consideration of newspapers' future, when it comes to online advertising: "Big newspapers ... are accustomed to tracking only a handful of local competitors," states the report. "With the Internet's low barriers to entry, they now face the prospect of being, well, nibbled to death by ducks."

David Utter is a staff writer for WebProNews covering technology and business. Email him here.